What is ETF?
ETF stands for Exchange-Traded Fund. It is a type of investment fund that is traded on stock exchanges, similar to individual stocks. ETFs typically hold a collection of assets, such as stocks, bonds, commodities, or a mix of them, allowing investors to diversify their portfolios without having to buy each asset individually.
Key Features of ETFs:
Diversification – ETFs often track an index (like the S&P 500), a sector, or a commodity, providing broad exposure to various assets.
Liquidity – Unlike mutual funds, ETFs can be bought and sold throughout the trading day at market prices.
Lower Costs – ETFs usually have lower expense ratios compared to mutual funds because many of them are passively managed.
Transparency – Most ETFs disclose their holdings daily.
Flexibility – Investors can trade ETFs like stocks, using strategies like short selling, options, and stop-loss orders.
Types of ETFs:
Stock ETFs – Track a stock index (e.g., S&P 500 ETFs).Bond ETFs – Invest in government, corporate, or municipal bonds.
Commodity ETFs – Invest in physical commodities like gold or oil.
Sector & Industry ETFs – Focus on specific sectors like technology or healthcare.
International ETFs – Provide exposure to foreign markets.
Thematic & Smart Beta ETFs – Follow specific investment themes or alternative weighting strategies.
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